FINANCIAL MARKET
AGENDA What is investment ? Why invest ? Where invest ? An Introduction to Financial Market Types of Financial Market Conclusion
What is Investment ?
Money we earn is partly spent and rest saved for meeting future expenses. Instead of keeping the savings idle we like to use savings in order to get return on it in the future. This is called Investment.
Why Invest ? Earn Return on idle resources Generate sum of money for specified goal in life Make provision for uncertain future To meet the cost of inflation
A Introduction to Financial Market
In economics, a financial market is a mechanism that allows people to easily buy & sell (trade) financial securities ( such as stocks & bonds ), commodities ( such as precious metals or agricultural goods ).
Types of Financial Market
Capital market
Commodity Market
Money Market
Financial Market
Derivatives Market
Insurance Market
Foreign Exchange Market
Options for Retail Investor Equity Debt Mutual Funds Fixed Deposits with Banks Post office schemes Gold Real Estate Insurance
Equity Shares
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It commonly referred to as ordinary share represents the form of fractional ownership in a business venture.
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Equity shareholders have the right to get dividends as declared.
DEBT
This instrument represents contract whereby one party lend money to another on pre-determined terms with regards to rate and periodicity of interest, repayment of principle amount by the borrower to the lender.
Classification of DEBT
BONDS: Issued by Govt.(Central and State),Public
Sector Organisation DEBENTURES: Issued by Private Corporate Sector.
Mutual Fund
A Mutual fund is a collective investment vehicle that
pools together investor money. This collective pool of money is invested in accordance to stated objective. Mutual Funds are : A large pool of resources Managed by professionals Diversified investment for lower risk & better return
Fixed Deposits with Banks
It allows an investor to deposit a lump sum of money for a
fixed period ranging from a few weeks to a few year and earn a pre-determined rate of interest. Guaranteed Returns depends upon term. Safe and Secured Investments
Post Office Schemes Offered by Govt. of India Safe, secure and risk-free Investment No Tax deduction at source (TDS) Transferable to any post office in India Attractive Rate of Interest Post office monthly income scheme Kisan Vikas Patra National Savings certificate Public Provident Fund
GOLD
ď‚— Physical Gold in the form of bars and coins ď‚— Gold accounts in banks where units in the gold a/c in
the banks are backed up by physical gold held in the bank and bank gives assurance that the investor can convert the gold back to cash anytime.
Real Estate Investment Financial instrument that invests primarily in the
real estate such as offices, apartments, shopping centres, hotels etc. Tend to pay high returns( often as high as 10%) Attractive investment opportunity when the stock
market is falling.
Insurance A promise of compensation for specific potential
future losses in exchange for a periodic payment. Now it is considered as a investment tool also: ULIPs Traditional Plans
Conclusion
Investors looks at superior returns and measured risk therefore he has to select a dynamically balanced asset allocation mix consisting of the different investment options available in the Financial Market.
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